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Pipelines run toward oil storage tanks stand at the Enbridge Inc. Cushing storage terminal in Cushing, Oklahoma, U.S., on Wednesday, March 25, 2015. Daniel Acker/Bloomberg (Daniel Acker/Bloomberg)
Pipelines run toward oil storage tanks stand at the Enbridge Inc. Cushing storage terminal in Cushing, Oklahoma, U.S., on Wednesday, March 25, 2015. Daniel Acker/Bloomberg (Daniel Acker/Bloomberg)

energy

Oil-by-rail’s biggest hurdle: a love of pipelines Add to ...

As resource sector jobs dwindle across Alberta, a study from a Calgary-based transportation research institute suggests that rail should be considered as a means for getting bitumen from the oil sands to international markets.

But Liberal and Conservative politicians both say pipelines remain their primary focus.

For several years, First Nations and energy leaders have proposed building a dedicated train line to carry bitumen from Alberta to Alaska and then on to buyers in Asia and elsewhere.

The Van Horne Institute recently studied the feasibility of a line that would transport at least a million barrels a day across 2,400 kilometres from Fort McMurray, Alta., to Delta Junction, Alaska, where it would be funnelled into a pipeline and sent to the Port of Valdez for loading onto ships.

The railway would cost between $28-billion and $34-billion and take nine years to build, something that could be delayed by consultations with First Nations and environmental oversight.

If approved, it would be one of the largest infrastructure projects in Canada and, according to the study’s authors, one that “involves substantial risk.” But, they say, it also offers an alternative to the current pipeline proposals, all of which face significant obstacles. And it could open a corridor along the rail line to mineral extraction.

When “you factor in, not only the export of the oil product as bitumen, but you factor in the mineralization, you factor in the jobs in the build, you factor in the economic benefits it will bring to First Nations communities along the route, you can start to build a pretty optimistic case that this is going to be very impactful in a very positive way in the not-to-distant future,” said Peter Wallis, the president of the Van Horne Institute.

That is, of course, if politicians and energy companies can be convinced that the railway is worth the money and the effort. Which is not at all certain.

With oil patch woes resulting in rising unemployment in Alberta – it hit 7.9 per cent in February, 2.5 percentage points higher than a year earlier – there has been much back-and-forth between Liberals and Conservatives in the House of Commons over which party is responsible for the downturn.

The Conservatives accuse the Liberals of stalling pipelines by overburdening the regulatory process. The Liberals point out that pipeline construction did not progress in any major way during the 10 years the Conservatives were in power and say comprehensive environmental reviews are what will move it forward.

But both parties agree it is pipelines that will help pull Alberta out of its resource slump.

Alberta oil currently makes it as far as Cushing, Okla., and no further, which creates a glut that allows American buyers to purchase the Canadian product at a cut-rate price because there is no one else who can buy it, Randy Boissonnault, the Liberal MP for Edmonton Centre, said in a telephone interview. So “we have to get oil to tidewater,” he said.

The railway proposal “is an example of Alberta ingenuity,” he said, and “those kinds of ideas are worth looking at.”

But, even though the study says there are ways to transport bitumen safely by train – the Alberta-to-Alaska project would use double-hulled cars, the grade would never be steeper than 1 per cent, and the route would not run through any communities – Mr. Boissonnault said safety would be a primary concern. And “pipelines are safer,” he said.

John Barlow, the Conservative MP for the Calgary riding of Foothills, said there is no reason to look to railways to solve the problem of Alberta’s oil transport when there are readily available, and obvious, alternatives.

Pipelines are extremely safe, and they emit less greenhouse gas than trains, Mr. Barlow said. “Pipelines are the solution, they are proven, they have a very good track record, they still create the same amount of jobs, and they would move a significantly higher amount [of bitumen] than rail.”

But the Van Horne Institute’s Mr. Wallis argues that the rail option should remain in the mix.

Given the amount of bitumen that can potentially be extracted, even if all of the other pipeline proposals went forward, a railway would still be needed, he said. It would not replace pipelines, Mr. Wallis said, “it would be in addition to the other proposals that are currently being investigated.”

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